why 10,000.00?
with ZERO money, me and my partner several years ago did the following.
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First, we had an argument about success and wealth and "what it takes to make it"
Second, i told him we were going to buy a house with no cash, no credit and no credit history.
Third, i educated myself. By chance, a good friend of mine who was a mortgage broker moved to Seattle from CO. I met with him for hours and hours and hours just asking questions about lending.
i learned after talking to several lenders and my friend that banks would probably not lend us money without a massive down payment and that mortgage companies are a little easier to borrow from since mortgage companies more or less execute against formulas and banks loan to people.
Fourth, i realized that i needed to do 3 things.
1) find the down payment (borrow from a friend)
2) have someone co-sign on the loan
3) after 1 year of making payments on time, we could refinance it into our name, pay off the loan and lower the payment at the same time.
Five, we just started making offers on cheap houses just to see what would happen.
Six, we got lucky - one of the biggest morons i have ever dealt with in my life accepted our offer for NO reason that we could understand. He was asking 95K for a house in a shitty area of Seattle. We offered him 75K and he accepted.
- note: we never understood why he sold the house so cheap. He either did not understand the market (which we thought was the most likely) or, was getting a divorce or had some reason to dump his assets. one thing i learned over time though was that most properties are sold for reasons we never consider (deaths, divorces, IRS etc)
One of the cool things about borrowing money from a mortgage company/bank.. is that they appraise the property and insure that you are not about to do something stupid with their money. so idiots are protected.
The house was appraised at 120K (plus we were making improvements as well to bring the value up)
Seven: THAT MEANS that we already knew a few things in advance.
1) the house was already valued at 120K and we were buying it for 75K
- that means that if the market was steady, we could refinance AND borrow the money out of the house that we would borrow to pay the down payment.
2) the house was expected to increase in Value at about 7% over the coming year - which gave added insurance that we could borrow money out to pay back the original downpayment money.
B-O-N-U-S!!!
We learned that the house was also being rented through a HUD program through the Seattle Public Housing Authority. The rentor was handicapped. They paid 90% of her rent if i recall AND they paid MORE rent than the house could get on the market.
The City decided the house could rent through their program for 1150.00 per month IF we added one more bedroom and made some small changes. We did that and took advantage of the housing shortage for this program and knew now that we had a virtual 100% guarantee of collecting 1150.00/mo to cover payments of about 800.00/mo.
Eight: i went to my grandfather and asked him if he would give me 15K at 10% interest for one year.
it did not come easy and i had to show him the appraisals and justify everything and guarantee him that i could pay him back.
i had my mortgage broker friend come meet him to explain things in further detail just for added assurance.
Nine: he agreed, gave me the money and bought the house.
Ten: in one year, we refinanced it, took out 25K and paid my grandfather back 15K and kept 10K... and the house supported itself.
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Its not about how much money you have.... its about will and determination to succeed.
i have been broke many times. most of the time, i just enjoyed the challenge of making money again from nothing.
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